An oversight in the recently passed balanced-budget law has opened the door for specialty provider groups to try to reverse the law's intention of capping their Medicare payments.
The law is supposed to cap Medicare payments to psychiatric, rehabilitation and long-term-care hospitals and units not subject to Medicare's prospective payment system. Those "PPS-exempt" facilities totaled more than 3,300 last year (See chart).
However, the budget law may not have given HCFA the authority to impose those caps on the PPS-exempt facilities. So Congress may have to step in and fix the flaw.
Because the specific language in the law authorizes HCFA to estimate the caps but not implement them, provider groups last week said they may call on Congress to clean up the language on PPS-exempt hospitals with a "technical corrections" amendment.
"It is clear in the midst of rapid drafting that Congress left something out," said James Bentley, the American Hospital Association's senior vice president for policy. "I have every expectation they will fix it, and I have every expectation they will fix it with a retroactive date."
Although congressional aides insisted the language clearly calls for a cap, even HCFA officials hinted that a technical correction bill may need to be enacted.
"I can't imagine anyone telling you with a straight face that Congress didn't intend to have a cap," said a HCFA official who asked not to be identified. "Why bother coming up with (the cap) if you don't intend to implement the cap? Now the only question is, `Do we clean up the slop?' "
In fact, HCFA did calculate and impose the caps in its final hospital Medicare payment rules that implement provisions of the balanced-budget law effective Oct. 1 (Sept. 1, p. 6).
Bentley said the AHA's comments to HCFA in response to the rules may object to the caps on PPS-exempt hospital payments. But he said those objections would not be an attempt to stop the caps but rather to protest the precedent that would be set by HCFA's implementation of the caps without full legal authority.
"It's really a question of process," Bentley said.
Under previous law, Medicare reimbursed PPS-exempt facilities their allowable Medicare-related operating costs. Each hospital had an annual Medicare spending target based on its allowable per-discharge operating costs.
Providers with Medicare-related operating costs less than their targets received an additional incentive payment. Those with operating costs exceeding their targets did not get full reimbursement for those costs.
The balanced-budget law will amend the current payment system to set targets no higher than the 75th percentile of the PPS-exempt providers in each category in federal fiscal 1996, effectively cutting payments to the 25% with the highest annual targets.
In the hospital payment rule, HCFA estimated Medicare payments would be cut for psychiatric hospitals and units with per-discharge targets of more than $10,188, for rehabilitation hospitals and units with targets of more than $18,476, and long-term-care hospitals with targets of more than $36,449.